I use this method on the 1 hr chart to define background and trading direction.
Let's see if I can explain this well enough, in plain english to not have to post a bunch of charts.
1. Accumulation: When a mark down (down trend) is stopped on very high volume, the price will often go into a sideways range. When there is higher volume at the bottom of the range than the top, it's accumulation.
Sometimes there will be a reversal up, without the range forming first. If the stopping volume was ultra high, I would start taking 5 min long setups immediately and may have to sit through the range and manage the trade. (stop loss below bottom and watch for push attempts)
When we see this we can expect the price to attempt a mark up (up trend). As it breaks the top of the range, it's pushing thru that supply (resistance) and the out come can determine if the mark up attempt will be successful or not.
2. Mark up (up trend): After the accumulation phase and successful push thru supply (and possible test) price trends up, making higher highs and higher lows.
3. Re-accumulation: During a markup phase, price retraces down. It might go to a support level or 50, 618 reversal zone. If that down move hits large stopping volume, and we see the same behavior as accumilation, then it's Re-accumilation. A test of the recent high or higher is likely.
Note: Re-accumulation can fail just like accumulation. This is usually revealed as a push thru fails on high volume, or general wide spread high volume up bars that don't continue on the next few bars (weakness).
After that we have the same in reverse..
4. Distribution: The markup is stopped on very high volume creating a side ways range. Higher volume should appear at the tops.
5. Mark down: Same as mark up in reverse.
6. Re-distribution: same as re-accumulation in reverse.
I think that's pretty clear. With this in mind, I enter and manage trades off the 5 min.
Let's see if I can explain this well enough, in plain english to not have to post a bunch of charts.
1. Accumulation: When a mark down (down trend) is stopped on very high volume, the price will often go into a sideways range. When there is higher volume at the bottom of the range than the top, it's accumulation.
Sometimes there will be a reversal up, without the range forming first. If the stopping volume was ultra high, I would start taking 5 min long setups immediately and may have to sit through the range and manage the trade. (stop loss below bottom and watch for push attempts)
When we see this we can expect the price to attempt a mark up (up trend). As it breaks the top of the range, it's pushing thru that supply (resistance) and the out come can determine if the mark up attempt will be successful or not.
2. Mark up (up trend): After the accumulation phase and successful push thru supply (and possible test) price trends up, making higher highs and higher lows.
3. Re-accumulation: During a markup phase, price retraces down. It might go to a support level or 50, 618 reversal zone. If that down move hits large stopping volume, and we see the same behavior as accumilation, then it's Re-accumilation. A test of the recent high or higher is likely.
Note: Re-accumulation can fail just like accumulation. This is usually revealed as a push thru fails on high volume, or general wide spread high volume up bars that don't continue on the next few bars (weakness).
After that we have the same in reverse..
4. Distribution: The markup is stopped on very high volume creating a side ways range. Higher volume should appear at the tops.
5. Mark down: Same as mark up in reverse.
6. Re-distribution: same as re-accumulation in reverse.
I think that's pretty clear. With this in mind, I enter and manage trades off the 5 min.
